Contract CloseOut

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Contract CloseOut
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Overview of discussion

• What is a contract closeout and its purpose?
• When is a contract completed?
• When is a contract ready for closeout?
• What are some specific issues that can occur
  during a contract closeout?
• Contract closeout checklist

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Purpose of Contract Closeouts

1. To verify that both parties fulfilled their
   contractual obligations.
2. To assess the success of the contract and lessons
   learned for future contracting.

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What is a contract closeout?

• It is usually a simple, but detailed
  administrative procedure agencies should perform
  after the contract is completed.

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A Contract is completed When

• All goods and services have been received and
  accepted
• All reports have been delivered and accepted
• All administrative actions have been
  accomplished
• All agency-furnished equipment and material have
  been returned
• And final payment has been made to the
  contractor.

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When is A contract ready for closeout?

• All services have been satisfactorily performed,
  and all products have been delivered and accepted
  by the agency
• Final payment has been made
• All property, inventory, and ownership issues are
  resolved including disposition of any equipment
  or licenses purchased under the contract
• Contractor is aware of and is in compliance with
  records retention requirements and a plan has
  been developed for contract file maintenance
• Any deficiencies found as part of the closeout
  process are documented and communicated to all
  appropriate parties

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Performance and Payment Bonds

• A performance bond is a surety bond issued by an
  insurance company or a bank to guarantee
  satisfactory completion of a project by a
  contractor.
• A payment bond is a surety bond posted by a
  contractor to guarantee that his subcontractors
  and material suppliers on the project will be
  paid.

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Payment withholding or Retainage

• Retainage is a portion of the agreed upon
  contract price deliberately withheld until the
  work is substantially complete to assure that
  contractor or subcontractor will satisfy its
  obligations and complete a construction project.
• This usually occurs in construction contracts
  where a 10 retainage is typically withheld and
  not due until the work is substantially complete.

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Transition to new vendor

• Establishing a new contract creates a range of
  issues and potential risks that need to be
  managed. 
• Transition Plan
• Executive Summary
• Transition Approach
• Team Organization
• Work Execution
• Subcontractors
• Property
• Knowledge Transfer
• Schedule
• Handover and Acceptance

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Vendor performance tracking system

• Any deficiencies found as part of the closeout
  process are documented and communicated to all
  appropriate parties
• Vendor Performance Tracking System
• Exceptional performance
• Unethical business practices
• Repeated delivery and performance issues
• Report vendor performance on purchases 25,000 or
  greater
• The scope accuracy of the data collected is
  dependent upon the participation of agencies.

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Contract closeout checklist

• All products or services required were provided
  to the buyer.
• Documentation adequately shows receipt and formal
  acceptance of all contract items.
• No claims or investigations are pending on this
  contract.
• Any buyer-furnished property or information was
  returned to the buyer.
• All actions related to contract price revisions
  and changes are concluded.
• All outstanding subcontracting issues are
  settled.
• If a partial or complete termination was
  involved, action is complete.
• Any required contract audit is now complete.

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Questions?